Are Personal Finance Experts Too Preoccupied with Lattes?

When I graduated from college and began my job search, money was tight. A relative suggested a personal finance book he liked by a famous money guru, and I picked it up from the library. One of the first chapters was about “easy” ways to save money. Among the suggestions:

Stop buying lattes.

Pack a lunch instead of eating at restaurants.

Wait an extra month between visits to the hair salon.

Get rid of your cable TV service.

Considering I didn’t drink coffee, was subsisting on powdered soup and peanut butter, hadn’t gotten a haircut in well over a year and didn’t even own a TV, let’s just say none of this advice spoke to me.

Such personal finance advice has become known by critics as the “blame the latte” movement. The idea behind it is simple: Cut out small luxuries, invest that money and end up with tens of thousands of extra dollars years down the line. The infamous Starbucks latte became shorthand for these meaningless luxuries, with experts from Suze Orman to David Bach inviting their audiences to use its cost as a starting point for calculating the money they were wasting.

As the recent economic downturn progressed, however, this line of thinking started getting some backlash. Some called it misleading. Felix Salmon, writing for Reuters, called the line of thinking “personal-finance snake oil,” calling into question whether foregoing the daily latte would actually yield the huge investment returns financial gurus were promising. Dan Caplinger, writing for AOL’s DailyFinance argued that fretting over small expenses takes consumers’ minds off their big financial picture — and makes them think they’re making good choices while, in fact, they’re just spinning their wheels.

The biggest critics of the “blame the latte” movement, however, are those that argue it doesn’t do anything for those who need personal finance help the most — those whose finances were ravaged in the recession. As the personal finance blog BudgetTracker points out, there are many families who have already cut back as much as they can. Lattes aren’t even an option for them. Author Helaine Olen, whose book, “Pound Foolish,” provides a scathing review of the personal finance industry, has called latte-related advice downright condescending to those trying to decide between medical bills and rent, not between “grande” and “venti.” In her promotion of the book, she’s accused popular personal finance gurus of inviting consumers to blame themselves for their predicaments — and then profiting off that self-blame.

I won’t say that there’s no place for “blame the latte” advice. For those who have disposable income and are looking to plug financial leaks, daily $5 habits are a great place to start. It’s been about seven years since I checked that book out of the library, and except for one more brief stint as a student, I’ve been gainfully employed since then. And I’ll admit, there have been times when the “blame the latte” advice fits my lifestyle.

It’s not necessarily lattes I’m buying. For me, it’s usually meals out. Sometimes it’s pricier, “gourmet,” versions of my grocery staples. Personal finance apps (like Mint), which separate purchases by category, make it easy to see pricey habits forming. If I notice that my food spending is surpassing the previous month’s, I set ground rules — only one meal out per week for the rest of the month, for example. In other words, I do buy the occasional “latte,” but cut back when it starts to cut into the money I can put into savings every month. So, I suppose I am following the “blame the latte” advice because there are often lattes in my life that need to be cut out.

Yet it’s also important to recognize that it’s not an option for many. Need proof? Follow Olen’s advice and play the online game Spent, which puts you in the shoes of an unemployed head of a household trying to make it through one month. I said “no” to every frivolous purchase (and even some not-so-frivolous ones), and I was still reaching for the payday loans options near the end of the month.

Whether you’re trying to cut out frivolous purchases, or just trying to stay afloat financially, here’s some personal finance inspiration from around the blogosphere:

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